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EU Opens Case Against the U.S.
Over Cuban Trademark for Rum

A Wall Street Journal News Roundup

Updated July 4, 2000 12:01 a.m. ET

BRUSSELS -- In a dispute which combines copyright law and U.S.-Cuba policy, the European Union has opened a case in the World Trade Organization against the U.S. over the ownership of a brand of Cuban rum.

A WTO dispute panel has been requested to rule on a tussle between two drinks manufacturers, Bacardi and France's
Pernod Ricard SA,
over which has the right to the "Havana Club" trademark in the U.S.

See the full text of the European Union's request to a WTO dispute panel to probe a U.S. law on trademarks.

The EU objects to the 1998 U.S. Omnibus Appropriations Act that says trademarks connected to assets confiscated by Cuba's Communist government after the 1959 revolution cannot be registered without the permission of the original owner.

Partners in Suit

A U.S. federal court in February cited the act in blocking a trademark infringement suit filed by Havana Club Holdings SA, a joint venture between Pernod Ricard and a Cuban state company to market Havana Club rum.

Havana Club Holdings filed the suit in 1996 after Bacardi, the world's largest privately held spirits company, began selling a Bahamian rum in the U.S. under the Havana Club name.

The EU's executive commission argues that the act violates a WTO agreement on intellectual property by treating some foreign right-holders with Cuban assets less favorably than U.S. right-holders.

It said the law also broke international trademark rules since the registration of a trademark "cannot be made conditional on the consent of a trademark owner who has abandoned his rights."

The row joins a list of nagging trade disputes that have soured relations between the 15-nation EU and the U.S., including disputes over hormone-treated beef, bananas, U.S. tax breaks for exporters and EU government aid to aircraft consortium Airbus.

The EU launched the WTO case in July last year. It decided to seek a panel decision after WTO consultations with the U.S. in September and December 1999 -- the first step in the WTO's disputes settlement procedure -- made no progress.

The commission said that WTO's dispute settlement body would deal with its request for a panel on July 27.

Bermuda-based Bacardi last year called the EU's WTO complaint "an unwarranted and reckless intrusion into a civil dispute between two business competitors."

Cuba has applauded the EU's stance. President Fidel Castro has threatened to escalate the dispute by taking reprisals against U.S. brands registered on the island.

The dispute has its origins in 1960, when Jose Arechabala's Havana Club rum plant at Cardenas, Cuba, was expropriated by Mr. Castro's government.

The Pernod Ricard joint venture was formed in 1993, although its rum cannot be sold in the U.S. because the U.S. government has banned all Cuban imports since 1962.

At stake in the case are rights to the lucrative U.S. market if the embargo is lifted.

In April 1997, Bacardi said it acquired from the Arechabala family the rights to the Havana Club trademark in the U.S., Cuba and elsewhere.

Right Upheld

A U.S. appeals court in New York in February upheld Bacardi's right to use the Havana Club label in the U.S. Pernod Ricard later said it would take its case to the U.S. Supreme Court.

Rum made by the Bacardis, also a Cuban exile family, is not only the world's top-selling rum by far, but the biggest-selling spirit brand of any type. The $1.5 billion (1.57 billion euros) U.S. market is the world's biggest and Bacardi controls half of it.

It is the second time in recent years that a U.S. law on Cuba has angered the EU. The union also opposed the Helms-Burton Act, which sought to tighten Washington's embargo on the island by penalizing foreign firms investing in confiscated property.